Indian American ex-IT executive pleads guilty to insider trading

An Indian American former information technology executive has pleaded guilty to the conspiracy of committing securities fraud and aiding in the preparation of a false tax return.

Dayakar Mallu, 51, is scheduled to be sentenced on January 24. He faces a maximum penalty of 25 years in prison for the conspiracy and three years in prison for the tax offence.

According to court documents and his admissions in court, between 2017 and 2019 Mallu conspired with others to trade in the securities of Mylan, a NASDAQ-listed public company, in advance of corporate announcements concerning drug approvals, financial earnings, and a merger.

Mallu, who was the then vice president of Global Operations Information Technology of Mylan, and an unnamed co-conspirator, a Mylan executive, conspired to provide him with material, non-public information in advance of the companys public announcements.

He then placed trades in the companys securities and shared trading profits with his co-conspirator through cash transactions in India. His trading resulted in more than USD 8 million in unrealized profits and losses were avoided.

Mallu ultimately realized net profits and losses avoided of more than USD 4.2 million from his insider trading, the Department of Justice said.

He admitted in the court, that he sent false information to his tax preparer relating to Opel Systems LLC, a company he owned and controlled.

Specifically, Mallu falsely told the preparer that Opel had paid USD 1.3 million to a contractor when, in fact, he had caused Opel to transfer those funds to his securities brokerage account. Mallus false statement resulted in preparation of a false 2015 corporate return for Opel, the Department of Justice said.

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